Oct. 28, 2023
Public Comment on Regulations.gov Subject: Safeguarding Advisory Client Assets - Proposed Rule Amendments Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed rule amendments related to the safeguarding of advisory client assets. While it is crucial to enhance investor protections and address gaps in the custody rule, I have concerns regarding the lack of clarity in the definition of digital assets and the potential implications for the growing field of cryptocurrency. Digital assets, particularly cryptocurrencies built on blockchain technology, have transformed the financial industry. They offer new opportunities for investors to diversify their portfolios and participate in alternative investment vehicles. However, due to regulatory uncertainties, it is crucial to strike a balance between investor protections and promoting innovation and market growth. One of my key concerns with the proposed rule amendments is the lack of clarity in defining what constitutes a digital asset. In an evolving landscape where new types of digital assets and cryptocurrencies are constantly being developed, it is essential to provide clear guidance to both investment advisers and investors regarding the treatment of these assets. Without a precise definition, the proposed rule opens the door to confusion and potential misinterpretation. Investment advisers need clear guidelines to determine whether a particular digital asset falls under the scope of the rule. This clarity is necessary to ensure consistency in compliance and avoid unintended consequences or burdensome requirements. Moreover, the proposed rule should acknowledge the unique characteristics and challenges associated with digital assets. Blockchain-based assets operate on decentralized networks, and their custody and security mechanisms differ from traditional financial instruments. Investment advisers need specific guidance on how to apply the safeguarding requirements to these assets appropriately. While I understand the importance of safeguarding client assets, it is essential to strike a balance between protecting investors and fostering innovation. Regulating digital assets without stifling their potential for growth requires a nuanced approach that encourages responsible practices while supporting the development of the industry. To achieve this balance, I urge the SEC to collaborate with industry experts, technologists, and stakeholders to develop comprehensive guidelines that address the unique aspects of digital assets. By engaging in dialogue and understanding the intricacies of this rapidly evolving field, the Commission can ensure effective regulation that promotes market integrity and investor protection. In conclusion, while I appreciate the SEC's effort to enhance investor protections through the proposed rule amendments, I strongly recommend providing greater clarity regarding the definition and treatment of digital assets. This clarity will not only benefit investment advisers but also enable investors to navigate the evolving landscape of digital assets with confidence. Thank you for considering these comments. I trust that the SEC will take into account the concerns raised by stakeholders to ensure the rules and regulations provide both sufficient transparency and a supportive environment for the development of digital assets and innovation within the industry. Sincerely, Kevin Jones Sent from my iPhone